Our client needed to improve its ability to forecast the category based on a range of input variables.
We built an econometric model to identify the drivers that impacted the category and how important each one was. We used this information to build a tool that would forecast the category based on forecasts of these drivers.
The client was given the tool and used it to run different scenarios to inform business planning, based on a range of different assumptions, from pessimistic to optimistic. In this way not only were they able to arrive at an agreed forecast, but were also able to ‘stress-test’ their plans by calibrating how much the forecast scenario output varied in response to changes in the inputs, giving them a measure of the risk involved in each scenario.